Dive Brief:

• Hydro One Ltd. and Avista Corp. have reached a settlement in principle with several parties in Washington, including financial protections for customers, to advance their proposed merger at the state's Utilities and Transportation Commission.
• The $5.3 billion all-cash deal was announced last year and obtained approval from the Federal Energy Regulatory Commission. In addition to Washington, regulators in Idaho, Oregon, Montana and Alaska must still approve the merger.
• The agreement would incorporate the use of a portion of Avista’s deferred federal income taxes that would speed the depreciation schedule for Colstrip Units 3 and 4 in Montana to reflect a remaining useful life of those units through Dec. 31, 2027.

Dive Insight:

The deal struck in Washington does not include an agreement with regards to closing two units at the 2.1 GW Montana coal plant, but does clear the way for Avista to make arrangements to shutter it early.

Puget Sound Energy and Talen Energy co-own Units 1 and 2, which are scheduled to be closed by 2022. PSE, Talen, Portland General Electric, Avista Corp., PacifiCorp and NorthWestern Energy co-own Units 3 and 4, which are slated to be shuttered by 2035 or sooner, should the deal go through. 

Parties to the agreement include the two utilities, staff of the WUTC, the Public Counsel Unit of the Washington Office of Attorney General, the Northwest Industrial Gas Users, the Industrial Customers of Northwest Utilities, and several renewables and conservation groups.

In addition to the financial protections for customers and the utility, the settlement includes provisions related to low income customers, conservation and the environment. The companies said they expect to finalize and file the settlement with the WUTC on or before March 27.

Under terms of the merger, Avista shareholders would receive $53 per common share, a 24% premium to the stock's closing price before the deal was announced. vista is one of the smallest investor-owned utilities in the nation, with 379,000 electric customers and 342,000 gas customers in eastern Washington, northern Idaho and part of southern and eastern Oregon. Hydro One is Ontario's largest electricity transmission and distribution provider with more than 1.3 million customers.